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Shipments and revenue were up in the U.S. and Asia/Pacific, but not enough to offset the declines in other regions. Budgets are restricted and buying new servers clearly isn't the highest priority for many organizations around the world, according to Adrian O'Connell, research director at Gartner.

Market leaders Hewlett-Packard and IBM suffered declines in both revenue and shipments. IBM had the most revenue in the sector, while HP sold the largest number of units.

IBM's revenue was just over $3 billion, down 13.6 percent year-on-year for a 25.5 percent share. The company's unit shipments decreased 13.9 percent to 230,446.

HP shipped 580,563 servers, which was down by 15.2 percent compared to the first quarter in 2012. At the same time, HP's revenue shrank by 14.4 percent to just under $3 billion or a 25 percent share.

While HP and IBM struggled, Dell and Cisco did much better despite tough conditions.

Dell was the only vendor in the top five that grew its server revenue during the quarter. It took in $2.1 billion, up 14.4 percent compared to the first quarter in 2012. That helped its share grow from 14.9 percent to 18 percent. Dell was trailed by Fujitsu and Oracle in server revenue.

Dell also increased shipments by 2.6 percent to 516,355 units, narrowing the gap between it and HP to about 64,000 servers, compared to 182,000 a year ago.

While Cisco was in fifth place in terms of units moved, behind IBM and Fujitsu, it grew shipments by 33 percent to 53,873 servers.

Gartner's "others" category -- which adds together revenue and unit shipments from vendors that aren't in the top five -- also grew by 14.5 percent and 14.6 percent, respectively.